THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

ALI VELSHI, CNN ANCHOR: OUTFRONT next: breaking news. Hugo Chavez is dead, and the bizarre accusation that the U.S. was somehow involved.

Plus, the Dow hits a record high. The economy still stinks, why?

And a powerful winter storm blankets the Midwest, headed to the east coast. Let's go OUTFRONT.

I'm Ali Velshi in for Erin Burnett. OUTFRONT tonight breaking news, Hugo Chavez is dead. The 58-year-old Venezuelan president has lost his long battle with cancer. President Obama issued a statement tonight, quote, "At this challenging time of President Hugo Chavez's passing, the United States reaffirms its support for the Venezuelan people and its interests in developing a constructive relationship with the Venezuelan government," end quote.

That comes just hours after the Venezuelan government expelled two U.S. Embassy officials from the country and accused enemies of attacking Chavez, suggesting someone may have deliberately infected him with cancer.

OUTFRONT tonight, Shasta Darlington is in the capital, Caracas. Shasta, what was the reaction when the announcement of Hugo Chavez's death was made?

SHASTA DARLINGTON, CNN INTERNATIONAL CORRESPONDENT: Well, you know, you might be surprised, Ali, but a lot of people were not prepared for this. Even though we haven't seen Hugo Chavez in public for almost three months, just last week, according to a poll, 57 percent of Venezuelans said they still expected him to recover.

So this is definitely a bitter pill for those people to swallow and what you've seen is people going out into the streets, going out into the squares and the plazas closest to the government buildings, people crying, showing their support and really showing their respect and love for a leader who really helped pull a lot of poor Venezuelans out of poverty and helped reduce that gap between the rich and the poor.

On the other hand, his critics, this is a very tense moment for them. You're going to hear from a lot of people who just want to get home. They want to get through this very tense period without any conflict between those who were for Chavez, who supported him, and those who opposed him -- Ali.

VELSHI: Shasta, earlier today, Venezuela's vice president gave a bizarre and rambling press conference. It's not bizarre and rambling compared to some of the stuff that Hugo Chavez has done, but he did other things. He talked about other things and it almost seemed that we were expecting to hear news of Chavez's death and that didn't come initially.

DARLINGTON: Absolutely. Ali, I was expecting to hear news of other things. It was just last night that we had heard that Hugo Chavez, his health had taken a turn for the worse. We had heard he was battling a new and severe respiratory infection.

So when the vice president, the man that he appointed to fill in for him called a meeting of all the top ministers and all of the top military brass, we all expected him to come out of that meeting with more details about Chavez's situation and possibly even news of his death.

Instead, it was this hour-long rambling news conference accusing the United States of interventionism, they expelled these two U.S. military attaches for allegedly trying to destabilize the country and most bizarrely, as you said, he accused foreign enemies of somehow being behind Chavez's illness.

A very bizarre press conference and most definitely we got the feeling that he was trying to drum up support, really show what a firebrand leader he could be -- Ali.

VELSHI: What a remarkable story as it unfolds. Shasta Darlington in Caracas, Venezuela, thanks for joining us.

OUTFRONT tonight, CNN's Christiane Amanpour and Christopher Sabatini. He is the senior of policy at the America's Society and Council of the Americas. Christiane, let's start with you. Your sense of what effect Chavez's death has outside of Venezuela. Shasta gave us some sense of the feeling inside Venezuela. What impact will this have? What ripples will it have?

CHRISTIANE AMANPOUR, CNN CHIEF INTERNATIONAL CORRESPONDENT: Well, it will have the ripples that really we'll see what happens inside Venezuela. Because if the movement does not continue and if it drops off, it's going to have a big impact on the relations with countries in Latin America, for instance, Cuba and others, which have relied on Hugo Chavez's generosity, his petro dollar diplomacy, his petro dollar economy, that have kept this tight orbit of nations around him.

For some people it could be a pretty rude awakening. Cuba really subsisted on the generosity of Hugo Chavez for many, many years so I'm sure there's a lot of worry going on there what might be the result. I think also, Chavez has shown himself to be, you know, whether it's to the United States, it was sort of a point of pride and honor for him to be the man who stood up and constantly kicked sand in the eyes of Uncle Sam.

And he sort of had this axis of friendship, if you like, with as I say, the Castros in Cuba, but also with Ahmadinejad in Iran and so there was this sense of standing up against the U.S. and that's where he derived a lot of his power and his popularity.

VELSHI: Christopher, we think a lot about this relationship of Chavez and the United States. It's complicated, though. It's not just this political relationship that Christiane is talking about. We get a lot of oil in the United States from Venezuela. What is likely to change under his vice president who takes over and then has to face an election?

CHRISTOPHER SABATINI, EDITOR-IN-CHIEF, "AMERICAS QUARTERLY": Well, first of all, Venezuela's the fourth largest supplier of oil to the United States. That's about a million barrels of oil a day that we receive from Venezuela. So oddly enough, over the last 14 years that Chavez has been in power, we have actually underwritten the Chavez revolution that has been kicking sand in the eye of the United States, as Christiane said.

But on the other hand, what we've done is diversified our supply of oil. We actually could survive a disruption of Venezuelan oil without much damage right now to the U.S. economy. But having said that, what we're going to see, we started to see this already with the accusations against the United States, is the U.S. Embassy is trying to reach out to this next government, aware that perhaps things will calm down a little bit.

I think the press conference today that we saw is an indication that they're not going to. They're going to still reach into their bag of tricks and try to stoke this anti-Americanism and in some cases use it to their own political benefit.

Clearly as a way to sort of as a smokescreen before the announcement of Chavez's death and also a way to sort of make an excuse for the last three months, where we thought he would come back and lo and behold he isn't.

VELSHI: Christiane, you used the expression "chavezma." This is the movement. This is the almost a cult of personality. He now has a vice president and maybe people don't think that vice president can necessarily carry that out.

As you said, that could create a vacuum in the region but at the same time, he did run in the last election against an opponent who some thought was formidable and would have been more friendly to the United States. What is the United States' next move here?

AMANPOUR: Well, just on the issue of this bizarre accusation today about the U.S. destabilizing Venezuela and U.S. and other foreign enemies being responsible for Chavez's cancer, the U.S. here, the State Department reacted predictably furiously today, saying that was absurd.

Those allegations by Maduro, that simply wasn't true and the U.S. did want stability in that region, and hinted of reciprocal action in other words, perhaps kicking out Venezuelan diplomats from here in the U.S. Now, what does all this mean for the future?

You know, as you say, there was an election in which Chavez won just over 55 percent of the vote, and his opponent won about 44 percent of the vote. That is the best the opposition have done against Chavez in the last 15 years.

So really, the question is does the opposition have a chance to do even better when there are new elections and they do have to, under the constitution now, be new elections in Venezuela. You know, will Maduro win and if he does, how long will he be able to give a run for the money?

How long will he be able to maintain that without having the same cult of personality? No matter who you talk to, nobody believes that Maduro is up to Chavez's public stature.

VELSHI: Chavez was an interesting character, Christopher. He got a lot of big name celebrities who liked him, endorsed him, Danny Glover, Oliver Stone, Susan Sarandon, Sean Penn released a statement tonight where he said today the United States lost a friend it never knew it had and poor people around the world lost a champion. I lost a friend. I was blessed to have.

Congressman Jose Serrano of New York tweeted, "Hugo Chavez was a leader who understood the needs of the poor. He was committed to empowering the powerless. RIP, Mr. President, rest in peace, Mr. President." How do you square that?

SABATINI: Well, he was very good at public relations. Of course, what he's very good at, too, in the United States, especially because he came to power during the Clinton administration, but really sort of staked his claim to sort of the United States during the Bush administration.

What he did was used a subsidiary of the Venezuelan oil company to distribute oil to poor communities. He sort of branded himself as the anti-Bush, but also sort of as the response to poverty and addressing poverty within the country.

So he used a windfall of skyrocketing oil prices to distribute patronage to his people and also to present himself after 50 plus years of very corrupt system, sort of an answer to the traditional ills of corruption and exclusion that had really dominated and weakened Venezuela.

That sort of became a very important and powerful rallying cry for people like Sean Penn and others who really wanted to see him as some sort of savior. At the end of the day, as we see in the last three months of his disappearance and the way he tore down institutions, undermined the Supreme Court, gamed the electoral system. He was really very popular with the poor. He was basically a populist.

VELSHI: All right, Christopher Sabatini, thanks very much for joining us. Christiane Amanpour joining us from Washington, D.C.

All right, still to come, the Dow Jones hits a record high so when is the economic recovery coming?

Plus a big announcement from the TSA, what they plan to allow on planes might shock you.

Washington State is looking for a pot czar. That's just where the story starts to get interesting.

(COMMERCIAL BREAK)

VELSHI: Our second story, OUTFRONT, record high. Talk of economic doom and gloom may still be a hot topic on Capitol Hill, but it doesn't look like Wall Street is listening. Today, the Dow Jones Industrial average rallied to a new record high, climbing more than 125 points, a great day for trading classes but what about the masses?

Take a look at this. The graph at the top I'm going to show you is the Dow since January of 2009. At the bottom, it's job creation. One headed north, the other one a lot flatter.

OUTFRONT tonight, Daniel Altman, economics professor at NYU and Doug Holtz-Eakin, a former director of the Congressional Budget Office. Gentlemen, thanks very much for being with us.

Daniel, let's start with you. That's the question I've had all day from people. How is it in this economy that doesn't feel like it's really pushing, is really firing on all cylinders, that the Dow has hit an all time high?

DANIEL ALTMAN, ADJUNCT ASSOCIATE PROFESSOR, NYU'S STERN SCHOOL OF BUSINESS: Well, the thing is that stock prices are based on expectations, because owning a share of stock gives you the right to a share of profits that come in the future for that company. So this is about expectations for the economy years down the road.

Now, it may take some time for that growth to arrive and the jobs to come with it. But we have other factors here, too, right? Because we know, for example, that there's not a lot of people in this country who have big stock portfolios. Most people --

VELSHI: In fact only 53 percent of Americans had any stock holdings whatsoever.

ALTMAN: That's right. So they're not seeing a lot of benefit right away from this. We also know that labor's share of national income, we split national income between people who have labor -- that's workers -- and people who have capital -- that's the shareholders. Labor share's been dropping pretty much since the government started keeping records back in 1940s. So, you know, this is not necessarily good news right away, but hopefully it will translate into higher profits and more jobs down the road.

VELSHI: Doug, how does that work? How do regular folks get a piece of this action? They've seen Wall Street, they've seen investors do particularly well while we still struggle. Sure, we have seen a lot of job growth in the last more than 30 months, but ultimately, everything's not firing the same way markets are. DOUG HOLTZ-EAKIN, PRESIDENT, AMERICAN ACTION FORUM: Yes. I don't put a lot of stock, pun intended, into day-to-day or week-to-week moves in the financial markets. Sometimes they're ahead of the real economy, that's what's going on now. Sometimes they're behind.

I think there are really two important facts about what's going on. Number one, a lot of this is nowhere else to go. The U.S. economy is among the best in a world economy that's not doing very well, quite frankly. And the stock market is the place to go because many other investments don't have much in the way of returns. And the Federal Reserve is trying to push people there. It's trying to push people into riskier investments to try to stimulate the economy, and it worked. We've seen gold and other commodities go up and have seen the stock market go up.

But I think the important thing, Ali is these are big companies. The Dow Jones are big companies and yes, they're doing fine, but the job growth is traditionally associated with start-ups. And one of the characteristics of this recovery has been not enough new businesses starting. That wouldn't show up in the Dow. That's what's missing. And that's where the help's going to come.

I guess the last thing I would say is unless the fundamentals catch up, unless we see the kind of income growth that we haven't seen so far, this can't last. I mean, you cannot defy reality forever.

VELSHI: Let me show you, Daniel, I want to take a look at the Dow again since March of 2009. That was the bottom. Dow was about 6,500 back then. Take a look at the bumps up. They tended to correspond, believe it or not, the first time with the Fed injecting a lot of money into the economy. The second time was QE 2. And the third time was QE 3, last September. That's the third installment of quantitative easing. That's the Fed throwing money into the economy. They are putting $85 billion into the economy every month.

We just struggled with talking about taking $85 billion out of the economy over seven months. Look at all those times. What does that say to you?

ALTMAN Well, Doug is right, the Fed is pushing people towards stocks because they're keeping interest rates down on a lot of other securities. But --

VELSHI: But you can't get a return by putting money in the bank.

ALTMAN: Well, you can't and you're not getting much by going into bonds, either. But there's something really interesting going on, which is if you look at the broader market indexes like the Wilshire 5,000 which is over 6,000 stocks, all the publicly traded stocks in the U.S., they have been rising even faster than the Dow and S&P 500, which are the biggest companies that Doug was talking about.

So, when you look at some of those middle market stocks, they've actually recovered even more. They have already broken their records back in 2012 since the worst part of this downturn. So the news is not all bad in the middle of the market. VELSHI: Doug, you're a conservative. You were Republican, last I checked. President Obama's been pretty good for the markets.

HOLTZ-EAKIN: This happens a lot.

VELSHI: It was 6,500 right after he took over.

HOLTZ-EAKIN: Well, I certainly wouldn't want to have inherited the economy that the president inherited, and it really had only one place to go, that was up. I mean, the financial crisis really took a beating.

So, remember that a lot of this is just recoveries from very bad lows in recent years, and that's good news. We want the markets to recover. We want the economy as a whole to recover.

But as I said before, this is going to be a short-lived celebration unless we start to see the fundamentals of the economy catch up with, as Dan correctly pointed out, people's expectations about what will happen. If their expectations are disappointed, we are going to see the market flatten right out.

VELSHI: All right, guys. Good to talk to you both. Doug Holtz- Eakin is former director of the Congressional Budget Office. Daniel Alman is an economics professor at New York University. For more analysis of today's record high, we've got a lot of it, go to CNNmoney.com.

All right. Still to come, do we need a President Bush in the White House? What Jeb Bush says about running in 2016.

And a monster storm hits the Midwest and is headed toward D.C. We've got the first images next.

(COMMERCIAL BREAK)

VELSHI: Our third story OUTFRONT, March roars in like a lion. Tonight, a deadly and powerful winter storm is slamming parts of the Midwest. Up to two inches of snow are accumulating every hour. By the time this storm makes its way to the East Coast, Chicago could be buried under nearly a foot of heavy, wet spring snow. This storm is expected to morph into a dangerous nor'easter over the next 24 hours pounding the East Coast with icy rain and snow.

Ted Rowlands is OUTFRONT in Chicago. Ted, what are the conditions like where you are?

TED ROWLANDS, CNN CORRESPONDENT: Well, Ali, you said it. It is cold and wet snow. It is that real thick snow, and it's been falling all day long. The winds were really gusting within the last few hours. They have dropped off a bit, but the snow continues to fall and it's expected to continue to fall for most of the night.

VELSHI: What's the impact on travel? I have been watching all day as I have been seeing flights canceled and redirected. ROWLANDS: Yes, over 1,000 flights, when you combine O'Hare and Midway airports. Midway, about 250; over 800 flights at O'Hare were canceled. They are flying out of both airports. And Midway was going to resume most of the flights past 6:00 this evening. It is just after 6:00 now, and because of the wind dying down, they are hoping to get a lot of people out tonight and tomorrow.

Bottom line, you know, Ali, that O'Hare is, when there's problems at O'Hare, there's problems around the country. No matter where you're going or coming from, check and make sure there's a plane to take you.

VELSHI: Major hub for American and for United. Let's talk about people on the streets. We have been showing pictures while you're talking of the streets of Chicago. Midwerners are hardy. They're tough, it's winter, they can handle snow. Are they getting around properly? Or are even Chicagoans thinking this is a lot?

ROWLANDS: Well, Chicagoans are thinking this is a lot because this is the third one in three weeks. But if you look at the main thoroughfares here - this is Michigan Avenue, downtown Chicago -- they are being treated basically constantly by salt trucks. They're not too bad. Look there's some slush there. It's the outlying streets where the accumulation is taking place. That's where people are having trouble moving around. But they're doing a pretty good job on these streets and on the freeways.

VELSHI: All right. Ted, good to see you as always. Ted Rowlands on Michigan Avenue in Chicago.

Hey, a surprise announcement today by the TSA. The dangerous item passengers will soon be allowed to bring on planes.

Plus, Jeb Bush makes a future play for the White House and gives a controversial and complicated plan for immigration.

(BEGIN VIDEO CLIP)

JEB BUSH, FORMER REPUBLICAN GOVERNOR OF FLORIDA: There should be no incentive for people to come illegally at the expense of coming legally.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

VELSHI: Welcome back to the second half of OUTFRONT. We start the second half of our show with stories we care about, where we focus on our own reporting from the front lines.

The top U.S. commander in the Middle East said sanctions against Iran are not working to curb the country's nuclear program. However, General James Mattis did say that sanctions should continue, but other options should be ready. Kenneth Katz has been with the Congressional Research Service and agrees more needs to happen for Iran to have a change of heart on the nuclear issue, including mass unrest on the streets. The imminent threat of U.S. military global -- military action and a global embargo on the sale of oil by Iran.

An OUTFRONT update now to a story we have been following in California. A nurse at an elderly home called 911 for a resident who had stopped breathing but that nurse refused to perform CPR despite knowing CPR.

We're learning tonight police are considering possible charges of elderly abuse. The facility has a policy against its employees providing medical care.

But we spoke to Assemblyman Michael Feuer who authored a Good Samaritan bill that passed in 2009 which protects any person from legal liability when intervening in an emergency. So that means the staffer, whether she was acting as a nurse or not, should not have been afraid of saving that woman's life if she could have.

Several items once banned on flights will soon be allowed on passenger planes in the United States for the first time since 2001. Pocket knives will be allowed on board, as well as golf clubs, ski poles and hockey sticks. But larger knives with locking blades and box cutters remain off limits. Citing the small weapons used by the September 11th hijackers, former Transportation Department Inspector General Mary Schiavo calls this a, quote, "huge mistake." The rules take effect on the April 25th.

Working at home in your PJs is quickly becoming the new office faux pas. Just a week after CEO Marissa Mayer banned Yahoo! Employees from telecommuting, Best Buy announced that it is ending its flexible work program. Like Yahoo!, Best Buy has fallen on hard times and says it needs all hands on deck. Analysts tell us the move is part of a company makeover.

Brian Neagle (ph) says fixing Best Buy's issues will take more than expensive tweaks.

Well, it's been 579 days since the U.S. lost its top credit rating. What are we doing to get it back? Home prices are returning to normal. One forecast shows home prices will increase by an average of 3.3 percent annually over the five years that will end in September 2017.

All right. Our fourth story OUTFRONT, President Bush -- is this country ready to say that again? Not about George Bush but about Jeb Bush.

For years, he's resisted talk about running for president but this week, it seems he's leaving the door open.

(BEGIN VIDEO CLIPS)

JAKE TAPPER, CNN ANCHOR AND CHIEF WASHINGTON CORRESPONDENT: What kind of factors will you be weighing in the next year as you make this decision?

JEB BUSH (R), FORMER GOVERNOR OF FLORIDA: Do I think that somehow I have a unique perspective that, you know, might be different, you know, that the skills I have might be useful going forward in terms of leadership? I don't know. I haven't thought about that.

Hogan, you know, when you listen to him saying, "I haven't thought about that," everybody who has ever run for president seems to have said that to an interviewer at some point, whether he's got a unique perspective or something unusual to offer.

What are your thoughts? Is the country interested and ready for another Bush?

HOGAN GIDLEY, REPUBLICAN STRATEGIST: Every governor sure has thought of being president. After all, the state governments are microcosms of the federal government. But at this point in time, look, statistics, they're out there during Barack Obama's re-election. A lot of the country still blamed President George W. Bush for the state of the economy. I disagree with that. I think those people don't know what they're talking about.

However, facts are facts and it's a political reality, fair or unfair. And at this point, I think the Bush name carries with it a huge amount of clout, can raise money -- obviously, he was governor of a big state like Florida. He's got a keen eye on the Latino community, he can help bridge some gaps for the Republican Party.

But at this point, I just don't think presidency -- excuse me, he makes a wonderful candidate.

VELSHI: Yes.

GIDLEY: I just don't know that he's the best candidate in 2016.

VELSHI: Ana, let's talk about in the last 24 hours, Bush has struggled to nail down his position on immigration. In his new book, he and his co-author write this: "A grant of citizenship is an undeserving reward for conduct that we cannot afford to encourage. Our proposal imposes two penalties for illegal entry, fines and/or community service and ineligibility for citizenship."

Now, here's what he told Jake Tapper today. Listen to this.

(BEGIN VIDEO CLIP)

BUSH: I have supported both, both the path to legalization or a path to citizenship with the underlying principle being that there should be no incentive for people to come illegally at the expense of coming legally.

(END VIDEO CLIP)

VELSHI: You have spoken, Ana, to Jeb Bush about this. It seems like a flip-flop.

ANA NAVARRO, CNN CONTRIBUTOR: Well, I have been speaking to Jeb Bush about immigration for decades and we e-mailed yesterday. He has told me he continues to support a path to citizenship, but I think he's very focused on one thing -- that there not be an unfair treatment of those who are here illegally versus those who have done it legally. So, not a bigger reward for those who have done it illegally.

It's a very valid point, but also I think we need to put it in context, Ali. Jeb wrote this book back in the wake of the Republican primary, where everybody was fighting over who was the toughest guy, the toughest sheriff in town against immigrants. So I think he thought the art of the possible back then was a lot narrower than it is today.

But in the meantime, he had to write a book, print a book and now publish a book. And I think the immigration debate moved a lot quicker, and that partisan divide has been narrowed much faster than he anticipated, the White House anticipated or most people anticipated.

VELSHI: Yes.

NAVARRO: We are somewhere far along on the immigration debate today, where we were not six weeks ago, much less six months ago.

VELSHI: Yes, interesting point you make. We're all along that.

Let me ask you this, Hogan. Speaking of conservatives and where we are the same and where we're not, the organizers of this year's Conservative Political Action Conference announced today that Donald Trump will be speaking at the event. This is the same event where they refused to invite Chris Christie.

This is weird. Christie's approval rating is at 74 percent right now. What are conservatives thinking?

The whole thing, though, is a little bit silly. Look, the fact of the matter is there are a lot of Republicans out there right now, 20 percent to 30 percent, who will never forgive Chris Christie for giving a French kiss to Barack Obama on the Jersey Shore. They just won't.

I think that's dumb. I think they should get over it. He's a Republican governor in a blue state, taking on unions, cutting spending, fixing the government up there, streamlining things. We should embrace people like this, broaden the tent, say this is somebody we want to be on our side. We should praise people like this instead of rejecting them.

And, look, you take your lumps when you do things that Republicans don't like --

VELSHI: Sure.

GIDLEY: -- but then we bring you back into the tent. Right now, he's still on the outside. He should not be. It's a mistake.

VELSHI: Ana, you and I were together on election night where we discussed the things that keep conservatives on the outside of the presidency in this country.

Shouldn't Chris Christie be getting a little warmer hug?

NAVARRO: But, you know what, Ali -- look, CPAC is a private organization of conservatives for conservatives. They're not the Republican Party.

In fact, I can tell you that this weekend, Chris Christie will be at an RNC event in Miami, where he will be speaking to some of the top donors. I think CPAC, whomever is choosing this list, is a marketing genius. We have now been talking for the last two or three weeks about who's invited and who's not invited.

VELSHI: Right.

NAVARRO: And what they're all about is selling tickets. Remember, this is not the Republican Party. This is not a policy- making forum. This isn't about putting on a show.

VELSHI: Isn't that kind of the problem? Isn't that the problem --

NAVARRO: It's a political revival.

VELSHI: Isn't that the problem we talk about? It's not the Republican Party. A lot of people say the Tea Party is not the Republican Party but these guys get the headlines. They do things like this and we end up talking about them.

NAVARRO: And this is why they get the headlines, because they've got colorful folks like Donald Trump to show up and talk because it's going to be the first time that Mitt Romney speaks after having lost the election, because they're getting Sarah Palin back.

Look, like it or not, they are great draws and they are great sells and they are colorful. They give quotable quotes that we all love to talk about for days and weeks.

VELSHI: Hogan -- you're right. Hogan, who can they get? Who can the Republicans throw their weight behind, the conservatives can be happy with and everybody else can be happy with?

GIDLEY: That's a great question. Still way too early. I think the purity sieve that we sometimes find ourselves looking through is a mistake as a party. There are plenty of folks out there, former governors, current governors, who have had to work across the aisle, who have to go out there and actually govern something.

Look, it's fine to take conservative stands on things. I'm all for that. But if you don't bring people along with you, you have really accomplished nothing except a press conference that doesn't move the ball forward.

We need people out there like some former governors, some Republicans out there, there are many, a Huckabee, Jeb Bush is one, who know how to work across the aisle, who know how to get things done and govern a people.

At the end of the day, those states are microcosms of the federal government. And we need more governors to -- that's why we've had so many governors as president.

VELSHI: Right.

GIDLEY: Right?

But, you know, it's still really early yet. Let's all just hold of and let this debt limit and all those types of things settle in.

VELSHI: Yes.

GIDLEY: Then, we'll focus on our candidate.

VELSHI: Good to talk to you. Hogan Gidley is a Republican strategist. Ana Navarro, also a CNN contributor and Republican strategist. Thanks to both of you.

All right. Now to Washington state -- been waiting to tell you this story -- where the business of pot is growing out of control. When OUTFRONT first brought you this story in January, state authorities were searching high -- no pun intended -- and low for a pot czar to help manage their new marijuana business.

Colorado along with Washington state voted to legalize recreational use of marijuana in November, even though federal law still says it's illegal. The search for a pot czar, though, continues and there's -- there we go again -- high interest in the position.

CNN's Paul Vercammen has the story.

(BEGIN VIDEOTAPE)

PAUL VERCAMMEN, CNN CORRESPONDENT (voice-over): Dude!

UNIDENTIFIED MALE: I love Washington.

VERCAMMEN: Where's my czar? As in marijuana consultant. In Washington state, after seminars and a lengthy search, they still haven't hired a marijuana advisor because they have been swamped with qualified applicants. The state liquor control board says it received 98 bids to become the consultant on implementing Washington's landmark legalization of pot, Initiative 502.

Entrepreneurs are waiting for guidance. Dante Jones wants his business, Green Ambrosia, to become a 5,200 square foot marijuana superstore. For now, Jones sells only to customers with medical prescriptions, such as Deadhead OG, Critical Cush and Amnesia Haze. Sales for recreational use become legal at the end of this year as a result of the ballot proposal's passage.

DANTE JONES, MARIJUANA VENDOR: The change in public perception since that November vote has been just dramatic.

VERCAMMEN: The marijuana consultant, law degree preferred, will advise on growing, transporting and packaging marijuana here. In other words: somebody who knows about marijuana from experience. That means some applicants with criminal records may be considered so long as their offenses were marijuana-related and nonviolent.

VERCAMMEN: The liquor board says it expects to pay less than $100,000 for the pot consulting and may divide the work among up to four bidders. The announcement of the winning bid or bids could come as early as next week. For the winner or winners, it could be euphoria. For dozens of losers, reefer sadness.

Paul Vercammen, CNN, Los Angeles.

(END VIDEOTAPE)

VELSHI: All right. Still to come, a new study says anti- government groups are more powerful than ever and there are surprising reasons why. Does it add up?

Plus, North Korea does something crazier than trotting out Dennis Rodman.

(COMMERCIAL BREAK)

VELSHI: We're back with tonight's "Outer Circle" where we reach out to our sources around the world.

More angry rhetoric out of North Korea. North Korea's official news agency reports the country is threatening to nullify the armistice agreement that ended the Korean War.

Anna Coren is following the story for us from Hong Kong.

(BEGIN VIDEOTAPE)

ANNA COREN, CNN INTERNATIONAL CORRESPONDENT (voice-over): As the U.N. Security Council met to discuss tighter sanctions on North Korea, as punishment for last month's nuclear test, Pyongyang fired back with angry rhetoric, this time threatening to scrap the armistice agreement that ended the Korean War in 1953.

Now, it's the first time the belligerent state made such a provocative threat, raising fears this could lead to all-out war on the Korean Peninsula.

Now, the United States will be conducting joint military exercises with South Korea starting next week, which is when Pyongyang says it will nullify the agreement.

While tougher U.N. sanctions are expected, some experts believe its history has proved that this will do nothing to deter North Korea from building its nuclear weapons program. Well, they say the only way to move forward is to get North Korea back to the table for dialogue with the international community.

(END VIDEOTAPE)

VELSHI: Thanks, Anna.

Now let's check in with Anderson Cooper with a look at what's ahead on "A.C. 360."

Hi, Anderson.

ANDERSON COOPER, CNN ANCHOR: Hey, Ali.

Yes, we have, obviously, a lot more in the breaking news, the death of Venezuelan President Hugo Chavez, his speeches, like this one at the United Nations where he famously likened President Bush to the devil, helped propel him to power and change the Venezuelan standing in the world.

I'm going to talk with Christiane Amanpour and Larry King, who interviewed Chavez. We'll talk about what he was like, what impact he had on Venezuela and what happens now.

Also tonight, Jodi Arias on the stand, trying to explain how one gunshot, 29 knife wounds and one cut throat somehow added up to self- defense. I'm going to speak with senior legal analyst Jeffrey Toobin, HLN's Nancy Grace, and criminal defense attorney Mark Geragos, because it was another fascinating day of her testimony on the witness stand.

And those stories also, a side of Olympian runner and accused murderer Oscar Pistorius that you might not know -- a darker side involving alcohol and guns, cover-ups and intimidation. We send investigative reporter Drew Griffin to South Africa. He is there for us tonight, keeping them honest.

All that and tonight's "Ridiculist", and a whole lot more, Ali, at the top of the hour.

VELSHI: All right. Anderson, we'll see you then, Anderson Cooper. Our fifth story OUTFRONT: the rise of hate in America.

Oberlin College in Ohio suspended classes this week after a student reported seeing someone dressed in Ku Klux Klan robes. It follows a string of recent hate incidents on campus. Now, last August, a 40-year-old ex-soldier-turned-white-supremacist-rocker shot up a Sikh temple in Oak Creek, Wisconsin, killing six people. You remember that.

A few weeks later, a group of Georgia men was linked to an anti- government plot to assassinate President Obama, and it's all part of what the Southern Poverty Law Center says is a disturbing trend. The group's new study says the number of anti-government groups is at an all time high, and many are driven by the fear that the government will strip them of their rights.

But the study's findings, do they add up?

OUTFRONT tonight, Mark Potok. He's the author of the report and a senior fellow at the Southern Poverty Law Center. Michael Medved is a conservative commentator for Salem Radio. And John Avlon is a CNN contributor and the author of "Wingnuts: How the Lunatic Fringe is Hijacking America", which is a suitable title for our discussion tonight.

Thanks to all of you.

Mark, let me start with you. You are the author of the report. It focuses on so-called "patriot groups" which you describe as conspiracy-minded, anti-government and on the radical right. Now, back in 2012, that was what the study counted, you looked at 1,360 so- called "patriot groups" on the radical right, an increase of 813 percent since 2008, right before President Obama took office.

But lots of questions are coming up today, Mark, about how you define these groups. Give me some sense of how you define these patriot extremist right wing groups.

MARK POTOK, SOUTHERN POVERTY LAW CENTER: Sure, Ali.

What the groups are, are the very same groups that we all used to call the militia groups back in the 1990s. They more normally describe themselves as patriot organizations or Christian patriot organizations.

You know, essentially what holds these groups together, what kind of makes them a movement, is that they all subscribe to a conspiracy theory which goes more or less as follows: they believe that the federal government has a secret plan to impose martial law on this country, very likely with the aid of foreign troops, perhaps U.N. "blue helmets", that the government will then come in and take all guns away from all American citizens. Those who resist will be thrown into concentration camps that either are now being built or have already been built by FEMA, the Federal Emergency Management Agency, and ultimately the United States will be forced into some kind of one- world socialistic government, what's often called the New World Order. VELSHI: Right.

POTOK: That's really what ties these groups together. And our listings of these groups are based strictly on ideology. It's not a matter of criminality or violence, or some kind of assessment along those lines.

VELSHI: All right. So it's -- OK, that's a good point.

Because, Michael, I want to ask you, 1,007 active hate groups in the United States in 2012 according to the Southern Poverty Law Center. Majority of the groups are in California. There are 82 of them there. Texas has 62. Florida has 59. Georgia has 53 and New Jersey has 51.

You say -- Mark says this is ideology not necessarily violence. You don't agree with that.

MICHAEL MEDVED, SALEM RADIO: Well, I just don't think you should criminalize dissent. There are a lot of crazy people in the country. I get callers who believe all those things on my radio show that Mark has talked about. We in fact once a month we do conspiracy day whenever it's a full moon and all the conspiracies can call in.

Now, some of these people have very strange ideas, but to say this is some kind of rising tide of danger and to cite a thousand groups -- I mean, talking about some of the groups that he cites, it's really problematic to me, because for instance, one of the things in the press release from the Southern Poverty Law Center was a lot of this is because we have a black president. One of the groups they list on their map of hate is the Nation of Islam.

Now, I'm not a Louis Farrakhan fan by any means, but I don't think the Nation of Islam has been associated with some kind of upsurge in violence and I don't think it's racist against a black president.

I also don't think it was fair that Mark included as a hate group in his designation the Family Research Council.

And, that by the way, actually led to an incident of violence --

VELSHI: Right. There was a --

MEDVED: -- where someone came in and shot a guard at the Family Research Council in Washington.

VELSHI: And, Mark, he did say -

MEDVED: And this is a mainstream conservative group.

VELSHI: Right. And he did say that he saw the name on your Web site.

Let me hold on to that point for a second. I'll bring John in here. John, square the circle for me between what you describe, what you've written at -- about as "wingnuts" and violence.

JOHN AVLON, CNN CONTRIBUTOR: Well, Ali, look, I think, first of all, what's important to realize is this is not debating classifications. This is not about criminalizing dissent. What's important about the work of the SPLC, I think, is tracking a trend which is unmistakable. You're talking about 800 percent growth in the number of self-proscribed patriot groups or hatriot (ph) groups over the presidency of Barack Obama, something is going on.

And to deny it has been a willful blindness in my opinion. We've seen the rise in the rhetoric, steady rhetoric, about this sort of communist conspiracy to undo the Constitution, the imposition of militia, martial law, very often it's --

VELSHI: To Michael's point -- so what?

AVLON: So what?

(CROSSTALK)

MEDVED: Rhetoric has retreated, John. There's more emphasis on the birther thing.

AVLON: Hold on. Listen, please, let me finish because this is important. Actually, the SPLC says that the rise of the number of nativist, anti-immigrant groups in the country has declined. And I think that does speak in part to an improving economy.

But what should concern us all is the ratcheting up of rhetoric and the safe harbor that some of these folks give folks. And the way this has become a racket that proliferates in the far reaches of hyper partisan media, and to deny that hate, to ignore its influence on our civic discourse, that is willful denial.

VELSHI: Mark, let me ask you, to Michael's point about the fact that he associates the -- you know, the conservative Christian organization Family Research Council that you've associated it as a hate group and that may have led to a crime -- what's your response to that?

POTOK: Well, first, let me say that it is not true that we are trying to criminalize dissent. I think we fully recognize that the vast majority of people involved in these groups, especially the "patriot groups", are not going to blow up a federal building, are not going to shoot anyone, are not, in fact, going to engage in any crime.

But as John suggests, I mean, to say that a lot of violence doesn't come from this milieu I think is just willfully blind. We know from looking back at the 1990s when the first wave of the militia movement occurred as well as in the last four years when we've seen growth in these groups that, in fact, there is a lot of terrorism or attempted terrorism or other kinds of political violence that the milieu produces.

With regard to the Family Research Council, we list that group unlike what it says, because they regularly propagate known falsehoods.

VELSHI: Got it. All right.

POTOK: Tony Perkins, the leader of the Family Research Council, has repeatedly and falsely said on national television and elsewhere that we list their group because they oppose homosexuality. They believe homosexuality is a sin and because they oppose same-sex marriage.

As Perkins knows, that is not true. We criticize them and have listed them as a hate group since 2010 --

VELSHI: Yes.

POTOK: -- because they put out information like the absolutely false claim that gay men molest children at vastly higher rates than straight men.

VELSHI: Mark, we're going to end it on that note.

POTOK: So, you know, FRC is depicting gay people as incestuous, evil, perverted and a danger to our nation and so on. We think we're fully within our rights to call them what they are, a hate group. Certainly we are not in favor of any violence.

VELSHI: Yes, I got you.

POTOK: That along the violence that occurred at FRC.

VELSHI: Thank you, Mark. Mark Potok is the author of the report. It's worth looking at that report, the Southern Poverty Law Center.

Michael Medved, as you know, is a conservative commentator for Salem Radio. John Avlon is a CNN contributor and the author of the book worth reading, "Wingnuts: How the Lunatic Fringe is Hijacking America."

Still to come the Dow Jones. We'll tell you more about that when we come back.